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Monday, 11 March 2013

MTS wins spectrum in eight circles

MTS will close operations in Mumbai, Maharashtra and Uttar Pradesh (East) though.

CDMA operator, MTS has won spectrum in eight circles including Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and West Bengal. However, it has failed to gain spectrum for Mumbai, Maharashtra and Uttar Pradesh (East).

MTS had spectrum in 22 circles out of which 21 licenses were cancelled by the Supreme Court in February 2012; its license in Rajasthan was not canceled by Supreme Court then. Later MTS decided to close its operation in 10 circles (whose licenses it had lost by the SC ruling) including Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu & Kashmir, Madhya Pradesh, North East, Orissa and Punjab.

Now since it only bought spectrum in eight circles, it will have to close down operations in three more circles including Mumbai, Maharashtra and Uttar Pradesh (East).

In a statement, the company said, "While bidding for spectrum in the auctions, MTS India considered a range of variables including spectrum pricing, number of carrier slots available, levels of competition, future data potential in the circles etc. Based on such criteria, the company also decided not to bid for Mumbai, Maharashtra and UP East circles and would be immediately initiating the process to inform its customers in 3 circles to port out to other telecom operators of their choice".

Vsevolod Rozanov, president and chief executive officer of Sistema Shyam TeleServices (MTS parent company), "Given the range of variables we have considered and the spectrum cost for 800 MHz, it was a big challenge to arrive at a core list of 8 circles and to bid accordingly. With Rajasthan circle also a part of MTS India's footprint, we would be able to service 40% of country's population, address over 60% of data business potential, safeguard 75% of our current revenues and significantly optimize our losses. Our go forward plan includes building an even stronger MTS brand in the country by focusing on our data centric-voice enabled strategy."

The spectrum won by SSTL in eight circles is technology neutral (it can offer 2G, 3G or even 4G services using this spectrum) and would be valid for 20 years. The company would be required to pay Rs 3,639 crores for the license period. The terms include payment of 25 per cent of the final bid amount within 10 days, followed by a payment moratorium until March 2016, after which the balance amount will be paid in 10 equal annual installments. The Government of India has confirmed that SSTL will be able to set off the previous license cost of Rs 1,626 crores against the new spectrum cost.

The company also said that 15 percent of its employees are employed in the three circles where the company decided not to bid and would therefore be affected and that full efforts are being made to absorb maximum number of employees in other circles or to place some of the employees in other Companies.

MTS has a customer base of over 12.1 million, out of which 13 per cent come from the impacted circles.